From e-file to AI, technology continues to change tax preparation

Artificial intelligence may be all over the news these days, but technology has been changing the way tax professionals work for decades.

Consider electronic filing. When the IRS launched its initial e-file pilot in 1986, just five tax preparers agreed to participate, filing about 25,000 returns in that first year. Four years later, e-file was available nationwide, with 4.2 million returns filed electronically.

Today, electronic filing is the standard for most individual federal income tax returns. What began as a limited pilot program eventually became routine in tax preparation.

The growing role of technology in tax preparation

During the 1980s, computers were also changing how tax professionals prepared returns. Software began handling calculations and other tasks that previously required manual work. Over time, professional tax preparation software became standard in the process.

In the late 1990s, the IRS introduced electronic payment options and began testing alternatives to paper signatures. Modernized e-File (MeF) later expanded internet-based filing to additional return types, including business and individual returns.

The way tax professionals interact with the IRS has changed, too. IRS e-Services provides online tools for practitioners, while Tax Pro Account allows eligible professionals to manage client authorizations and access certain client information electronically.

Work that once relied on paper forms, mailed documents and manual processing can now be handled electronically in many cases.

New tools bring new questions

Today's AI and automation tools represent another change in how tax professionals work. But that doesn't mean they're simply another version of e-filing. The capabilities are different, and so are the questions they raise.

For example, an AI-assisted tax research tool may be able to produce an answer to a complex tax question in seconds, but how do you know that answer is accurate? Can you verify the information against authoritative sources? And what happens when the tool overlooks an important detail or misinterprets a client's circumstances?

Similar questions apply to automation. A process that once required several manual steps might now happen with little or no hands-on intervention from a tax preparer. That can save time, but it also makes it important to understand what's happening behind the scenes, where errors could occur and when human review is necessary.

Data security and client confidentiality add another layer of responsibility. Before incorporating a new tool into your workflow, it’s important to understand what information it accesses, how that information is handled and whether appropriate safeguards are in place.

Making the most of new technology

Adopting new technology often means changing familiar processes or learning new systems. That can require extra time and effort upfront, but the potential improvements to workflows and client service may make the transition worthwhile.

This doesn't mean every new tool will deliver the same benefits. Some may offer significant improvements, while others may not be worth the cost or disruption to your existing workflows. The challenge is recognizing the difference so you can make strategic decisions about which tools to use in your practice.

NATP's Tax Technology Discovery Guide is a good place to start. It introduces tax technology solutions, with information about their capabilities, primary uses and integrations to help you compare options.

Keep learning as technology changes

From electronic filing to AI and automation tools, technology has continued to change how tax professionals work. As these tools become more sophisticated, understanding their capabilities and limitations becomes even more important.

At TaxCon 2026, Dec. 1-3, you'll learn how other tax professionals are using technology in their practices and explore real-world applications of AI and automation. You'll also learn how changes in the profession are creating opportunities to strengthen client relationships, expand your services and build a more sustainable practice.

Tools will continue to evolve, and so will you. Learn more about TaxCon 2026.